We’re working with the government to help shape the future of pension policy and ensure better outcomes for pension savers.
This includes submitting consultation responses, papers, and briefings, and having meetings with government and ministers. We also represent our members and employers, and our scheme’s interests, at various government and regulatory working groups.
Here are some of the key pension policy developments in 2025.
Pension Schemes Bill
The Pension Schemes Bill was introduced in the House of Commons in June 2025. It could be 2026 before it passes into law, as the Parliamentary debates may carry into next year.
The Bill sets out the following new requirements for defined contribution (DC) schemes.
- A Value for Money framework. This will require schemes to report against specified metrics – on investment returns, charges, and quality of services – and to compare themselves against other schemes. The government’s aim is to encourage employers and trustees to shift the focus of decision making from ‘cost’ to ‘value’. Value for money is at the heart of everything we do – we’re working with government and regulators to help make sure that this new framework enables accurate comparisons and delivers real value for members.
- A scale test. This means multi-employer DC schemes like ours will need to achieve a minimum of £25bn assets under management in a default arrangement by 2030. There are more details to come from government about definitions of key terms in the Bill, such as the ‘common investment strategy’. We think a broad approach – identifying where scale has an impact on efficiencies and pricing negotiations – would make for the best outcomes for members. We’ve been discussing this with government. We’re pleased to confirm that we’re well-positioned to achieve the government’s scale objective, following the growth of our scheme and our acquisition by Mercer in 2024.
- A reserve power to mandate investment in private markets and the UK. We’ve already committed to move into private markets where that is in the best interest of our members. This is part of our new investment strategy launched in 2024. Earlier this year we made our first private market allocation – to the UK affordable housing market. This investment also reflects now:pensions’ ambition to make responsible, socially impactful investments, that will also deliver good returns for members. In May we signed the voluntary Mansion House Accord, confirming an ambition to target a 10% allocation to private markets within our default fund including 5% specifically allocated to UK-based investments, where this is in members best interests.
- Automatic consolidation of small pots. This requires schemes to transfer pots worth £1,000 or less, that have not been active for 12 or more months, into newly-authorised ‘default consolidator’ schemes. now:pensions has long been advocating for this resolution to the issue of small pots to support better member outcomes. We’re working with government and others in the pensions industry on the details to make this a reality, and to ensure it works for pension savers.
- Guided retirement requirements. This means trustees will have to provide a default ‘pension benefits solution’ to their members. We expect this to include providing an ‘income for life’ – although there is more technical detail to follow from government on what this means, as well as some exemptions (such as for small pots). We’re working very closely with government on how this will work for all savers. In particular, on how the Bill might work best for a trust-based environment, as well as on the related topic of the Financial Conduct Authority’s (FCA) targeted support proposals, designed for the retail market. We continue our development of appropriate solutions, and working with government to ensure the system works well for everyone.
We’ll be actively engaging with officials and parliamentarians on these DC areas in terms of the underlying policy as well as the specific drafting of the Bill – including where crucial detail hasn’t yet been committed to draft law. This is to make sure that when the Bill and later planned regulation become law, it works to provide the right member and policy outcomes.
The Bill also enables contractual overrides for contract-based schemes to allow non-consent bulk transfers. Other measures include re-establishing the legal status of The Pensions Ombudsman as a competent court. It also introduces measures affecting defined benefit (DB) pensions. These include provisions for Local Government Pension Scheme (LGPS) pooling, the use of DB surpluses and the regulation of ‘Superfunds’.
Pensions Commission
On 22 July the government launched a new Pensions Commission. This will investigate why future pensioners are likely to be poorer than those retiring today and recommend reforms. The Commission is due to report in 2027.
We believe the Pensions Commission is an essential next step for the future of the UK pension system. It has the potential to improve member outcomes, address adequacy gaps and inequalities, and build a system which is fair for all. This is also a great opportunity for collaboration with pension savers, employers and the pension industry. Working together to develop practical policy solutions and concrete outputs – including a roadmap for future change – will ensure robust outcomes.
We look forward to engaging with the Commission as it collects evidence and examines key barriers to saving, including how they affect different types of savers and employers.
Pensions dashboards
The first pensions dashboard will be made available to the public by the government-backed impartial guidance service MoneyHelper. The MoneyHelper pensions dashboard is currently carrying out user testing and we are looking at how we and our members can take part in this. The public launch of the MoneyHelper dashboard will not be until next year.
Tax top-ups
now:pensions is a net pay scheme, so pension contributions come out of members’ pay before income tax is taken off. This means taxpayers get automatic tax relief, but members who don’t earn enough to pay tax wouldn’t get any tax relief.
We previously ran a tax top-up scheme for members who had paid pension contributions in the previous tax year, but hadn’t paid any income tax. This was to supplement the pension savings of members who didn’t benefit from tax relief on their contributions. Members could apply to us for a top-up. If they were eligible, we made top-up payments to their pension savings.
For the 2024-2025 tax year onwards, the government will pay top-ups to people whose earnings are below the personal allowance (£12,570 for the 2024-2025 tax year) and who are contributing to workplace net pay pension schemes (the top-up payment will go to their bank account, not their pension savings).
now:pensions has campaigned for years for a tax top-up for net pay scheme members. We’re pleased it’s been successful. We are now working with government to support delivery of this solution. HMRC have confirmed that payments for the 2024/25 tax year (and subsequent years) are to be made from 2026.
This article was originally published on 28 January 2025, and updated on 21 August 2025.
Lizzy Holliday
Director of Public Affairs and Policy, now:pensions
NP/B0068
